Russia: Secondary Sanctions Are Hurting Export Revenues, Oil Payments

Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
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Russia: Secondary Sanctions Are Hurting Export Revenues, Oil Payments

Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo
Russian oil cargo Pure Point, carrying crude oil, is anchored at a port in Karachi, Pakistan June 13, 2023. REUTERS/Akhtar Soomro/File Photo

Expanded sanctions on Russia and enhanced pressure on countries that Moscow considers friendly are hurting Russian firms' export revenues and creating oil payment issues, the Bank of Russia said on Friday.

The United States has hit Russia with waves of Ukraine-related sanctions and threatened secondary sanctions on foreign banks aiding transactions with Moscow. That has prompted some Chinese banks to limit dealings with Russian companies, Reuters reported.

"The widening of sanctions and pressure on friendly countries leads to companies' reduced export revenue," the central bank said in a report on financial stability in a section titled "main vulnerabilities.”

Russia distinguishes between countries that imposed sanctions over its actions in Ukraine and those that did not by calling them 'unfriendly' and 'friendly'.

"Unfriendly countries are hindering not only the sale of hydrocarbons, but also the realization of major investment projects," the bank said. "Against the backdrop of secondary sanctions, supply chains and payment mechanisms are becoming more complicated, which leads to higher import prices and supply disruptions."

The threat of secondary sanctions has also slowed Russian banks' increasing the number of correspondent accounts in friendly jurisdictions, the central bank said. Since the start of 2022, the number of correspondent accounts in US dollars and euros has dropped by 55%, it said.

US Treasury Secretary Janet Yellen on Tuesday said Washington's new authority to hit banks with secondary sanctions if they aid Russian military-related transactions had helped to frustrate, opens new tab Russia's efforts to procure goods needed for the conflict in Ukraine, but that more work was needed.



Kuwait Finance House Considering Expansion in Saudi Arabia

The Saudi flag
The Saudi flag
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Kuwait Finance House Considering Expansion in Saudi Arabia

The Saudi flag
The Saudi flag

Kuwait Finance House (KFH), the Gulf country's largest lender, is looking at opportunities to expand in Saudi Arabia, it said in a bourse filing on Tuesday, following a report that it was considering taking a stake in peer Saudi Investment Bank.

Trading in the company's shares, which were suspended before the market open, resumed after KFH issued a statement in response to the report.

KFH said it was conducting studies on the potential expansion and that these were in line with the bank strategy envisioning potential investments in the region, including in Saudi Arabia.

“Regarding the news published by Bloomberg, KFH confirms that it is still studying the available opportunities in more than one bank, and no memorandum of understanding or any agreement has been signed with any bank in the Kingdom of Saudi Arabia,” the lender said.

Amid news of the potential deal, shares of Saudi Investment Bank (SAIB) jumped as much as 4% in Riyadh trading Tuesday.

On Tadawul, the shares of SAIB, the second smallest listed bank in the Saudi financial market in terms of assets and capital following Bank AlJazira, ranged between 13.26 Riyals and 12.78 Riyals, closing on the latest figure.

Meanwhile, the share of KFH Bank, which is the largest in Kuwait in terms of assets and capital, rose by less than 0.50% at 0.717 Kuwaiti dinars.

The Kuwaiti government and the Public Authority for Minors Affairs own 31.5% of KFH’s shares. Vanguard Group owns 2.45% of the Bank’s shares and BlackRock owns 1.75%.

As for the Saudi Investment Bank, it is owned by the General Organization for Social Insurance - Saudi Arabia (25.6%), Yasser Mohammed Al Jarallah (4.6%), Vanguard Group (2%) and BlackRock (1.2%).